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Loss of the Thing Due
mainly discussed in Chapter 4 - Section 2 (Articles 1262-1269) in Title I of Book IV of the Civil Code of the Philippines. The loss of the thing due is a mode of extinguishment of obligation wherein the determinate thing is lost or destroyed without the fault of the debtor, and before he has incurred in delay.Civil Code, Article 1262 par.1 It is understood that the thing is lost when it perishes, disappears, or goes out of commerce in which such thing no longer exist and cannot be recovered.Civil Code, Article 1189 par.2 The loss of the thing due applies to both real obligations (to give) and personal obligations (to do). Extinguishment of Real Obligation An obligation to give may be extinguished by the loss of the thing if: * the thing due is determinate or specific. * the loss of the thing occurs without the debtor's fault. * the debtor has not incurred delay. However, an obligation may not be extinguished if: * the law does not allow it. * the stipulation does not allow it. * the nature of such obligation requires the assumption of risk.Civil Code, Article 1174 * the obligation to give arises from criminal offense.Civil Code, Article 1268 Extinguishment of Personal Obligation In an obligation to do, the loss of the thing due is considered equivalent to the impossibility of performance: * physically, when the prestation can no longer be performed due to incapacity or death of the debtor, although it is still legally possible. * legally, when the prestation cannot be performed because it is rendered impossible by provision of law, although it is still physically possible. The prestation shall be both physically and legally impossible in order to extinguish an obligation to do, provided that there is no fault of the debtor.Civil Code, Article 1266 It is also important to extinguish the two classifications of impossibility: * Natural impossibility, wherein the prestation cannot be done by any means; caused by nature of the prestation itself and not by the inability of the parties. Such impossibility renders an obligation void.Reyes v. Caltex-Philippines, Inc.; GR No. L-1802 (1949) * Impossibility in fact, wherein the the inability to perform the prestation is not due to the nature of the prestation. Such impossibility does not render an obligation void. An obligation can only be deemed impossible after its perfection or creation. If it is impossible from inception (the very beginning), an obligation is void and hence there is nothing to be extinguished. Effects of Partial Loss There is partial loss of the thing if: * only a portion of it is lost or destroyed. * it suffers depreciation or deterioration. The court determines whether a partial loss is significant or insignificant in case of disagreement between the parties:Civil Code, Article 1264 * a significant loss may extinguished the obligation as if it as a complete loss. * an insignificant loss may not be enough to extinguish the obligation. Difficulty of Performance In a personal obligation, a partial loss is considered equivalent to the difficulty of performance.Civil Code, Article 1267 The court is authorized to release the debtor from an obligation (in whole or in part) if the performance (service) has become so difficult to be manifestly beyond the contemplation of the parties under the doctrine of unforeseen events. Upon request by any of the parties, the court may release the debtor from his obligation: * in whole, if the performance (service) is totally or almost impossible, or very difficult. * in part, if the performance (service) is difficult;Civil Code, Article 1267 the debtor is released from part/s that are deemed difficult. The remedy of the debtor is to be released from obligation because it would be doing violence to still hold him responsible.Report of the Code Commission, p. 133 This is not an annulment/cancellation of an obligation. The remedy does not also authorize the modification or revision of the terms and conditions of a contractual obligation. The court can only release or not release the debtor due to difficulty. A contract that has become difficult to perform cannot be modified. Any complaint that seeks the modification of such contract is dismissible for failure to state a sufficient cause of action. The difficulty caused by extraordinary inflation or deflation of the currency in obligations to pay is discussed in Article 1250 of the Civil Code. Presumption of Fault of the Loss The fault of the debtor in case of loss of the thing due is: * presumed, unless there is a proof that the debtor was not at fault. * ignored, if such loss is caused by earthquake, flood, storm or other natural calamity. Until he delivered the thing, the debtor is liable even for fortuitous events if: * he is guilty of delay. * he has has promised to deliver the same thing to two or more persons who do not have the same interest. Loss of Generic Thing An obligation may not be extinguished by the loss of the thing due if such thing is generic. This is because generic thing never perishes (genus nunquam perit). The obligation can still performed whereby: * the debtor can deliver a thing of the same class/type as the one lost, which may be of superior quality but not of inferior quality. * the creditor can demand a thing of the same class/type as the one lost, which may be of inferior quality but not of superior quality. An obligation to pay money is also generic. However, an obligation may be extinguished if the thing due is only limited generic. Loss in Criminal Offences An obligation arising from a criminal offense cannot be extinguished in case of the loss of the thing (such as a stolen property) due to a fortuitous event. In this case, the debtor (the offender) is not exempted from liability regardless of the cause for the loss. Such obligation may be extinguished if the creditor (the offended) unjustifiably refused to accept the thing after it had been offered by the debtor. The debtor may hence be released as a result of mora accipiendi in case of a fortuitous event. Transfer of Rights due to Loss All the rights of action of the debtor are transferred to the creditor upon the extinguishment of obligation by reason of the loss of the thing due to a third person. Such right is given to the creditor instead of the debtor because otherwise the debtor would gain unduly profit. The transfer of rights is often applied in insurance. Bibliography General References: Websites: Citations: Category:Obligations and Contracts Category:Extinguishment of Obligation